Photo: Ofcom

Anyone who has ever signed a long-term contract with landline or broadband providers knows the feeling of seeing a better deal come by that you cannot take up because you’re locked into a torrid contract with very high early termination fees. That’s about to change, with Ofcom pressuring TalkTalk, BT and Virgin to slash the price of their contract termination fees.

What is a contract termination fee?

A contract termination fee is the amount of money one is still liable to pay for every month left on a contract they’ve recently cancelled. The termination fee is less than the monthly subscription fee, but is often still very high. Ofcom has pressured the major UK broadband providers to reduce this cost, so as to ‘reflect the costs that the providers save by no longer providing the service’ to you.

New pricing

Photo: TalkTalk

In some instances, TalkTalk, BT and Virgin would be reducing the cost of contract termination fees by as much as 85 per cent.

TalkTalk is first out the gate with termination fees revision, which previously ranged from £14.44 to £33.48, to between £3.00 and £8.00. The termination fee is relative to the package that you are on, and this pricing model kicked in on 1 June 2010.

Virgin Media and BT will follow suit from 1 October 2010. With respect to Virgin Media contract cancellations, while charges currently range from £11.99 to £25.99 they will be reduced to £4.00 to £9.00. BT’s contract termination fee sits at £11.54 to £16.53 for every month left on your contract. Come 1 October, that will range between £2.00 and £5.00.

Photo: Virgin

Ofcom has said that they will pressure (and potentially fine) smaller broadband providers to follow suit in slashing these fees.

You can read Ofcom’s full report and pricing revisions here, in case you’re currently trying to escape a contract you’re unhappy with.

Good on ya, Ofcom.

Photo: TalkTalk

BT and TalkTalk are the first major broadband providers to speak on the draft code provided by Ofcom.

The draft

Ofcom released its draft code for implementing the Digital Economy Act, the UK government’s online policy to squash illegal filesharing and piracy, so as to protect the creative industries.

Excludes the smaller players

For reasons relating to implementation, Ofcom’s code will initially be applicable to only UK ISPs with more than 400,000 users. This pretty much means all the high profile big players including BT and TalkTalk, naturally, as well as Virgin Media, 02, Sky, the Post Office and Orange.

Speaking to the Telegraph, a spokesperson for broadband provider BT said: ‘The UK currently boasts a highly competitive broadband market and we believe that such a move has serious potential to distort the market.’

This market distortion will occur if, as is likely to happen, file sharers begin migrating to smaller UK ISPs so as to fly under the radar for some time. This bleeding of subscribers, even if it is only a few hundred, would come about due to regulation that will target only major UK broadband providers (an unfair byproduct of Ofcom’s draft).

Hold your horses

Photo: Stock.Xchng

With the draft code not being finalised, yet, there is still time for revisions to the stipulations within the code to be remedied, though it does look like the Digital Economy Act is here to stay. And for web users, a few political hoops still need to be jumped through before Ofcom can enforce this act, meaning whatever fears you may have can be put to bed, for now.

Digital Economy Act chronicles

With the recent Google China controversy and Internet liberty becoming a hot topic in the developed (and developing world), we’ve taken particular interest in the Digital Economy Act from bill stage right until now. And, as major online publications worldwide have argued, our anti-DEA stance is not an act of support for piracy, for it clearly hampers the livelihoods of musicians, but rather an act of defiance against the first step in the slippery slope toward online censorship.

UK ISPs and broadband providers have until 30 July 2010 to give feedback on this initial draft.